Amazon case study
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Amazon started as an online bookstore called Cadabra Inc. and was founded by Jeff Bezos in 1994. The company name was changed to Amazon to reflect Bezos' vision of building something large in scale like the Amazon river. Amazon has grown tremendously over the years through strategic acquisitions and investments, innovative new offerings like the Kindle e-reader, and maintaining high operational efficiencies and customer convenience.
Amazon case study
- 3. Quiz about Amazon ? What was the first name for the company (before Amazon)? – Cadabra Inc. ? Where does the ‘Amazon’ name come from? – The name reflected the vision of Jeff Bezos, to produce a large scale phenomenon like the Amazon river. ? How much money has Amazon spent on real state (headquarters, warehouses, etc)? – Amazon owns zero real estate! ? In 2003 Amazon passed the $5 billion sales mark – it took Wal-Mart 20 years to achieve this. Amazon has only 13,900 employees (2006) , Wal-Mart has 1.9 million employees (2007).
- 10. Who want to buy products on Amazon Who want to buy products on Amazon Who want to use Amazon developing services Who want to use Amazon developing services Who want to sell products on Amazon Three Customer Sets Consumers DevelopersSellers
- 12. Ten Reasons to Choose Amazon Over eBay for Selling: 1.Elegance and simplicity 2.Absolute best price for your items 3.You're a small seller and want better visibility. 4.You don't want the fulfillment hassle (inventory, packing, and shipping) on your own. Or just send everything to Amazon, at no cost) 5.Your margins are tight and you need to minimize fees (you do not pay for listing and maintenance if you are with Amazon) 6.You want to be where the industry growth is (Amazon's marketplace platform is growing much more quickly year-over-year than eBay's) 7.You want to reduce overhead 8.You prefer to sell on a platform that changes rarely and slowly 9.You like integration 10.You've had trouble with eBay suspensions or feedback.
- 13. Knowledge management principles in Amazon 1. One portal, one interface, one-stop shopping. 2. Outstanding content management 3. Modular content 4. Distributed upstream content creation 5. Almost magical personalization 6. Crowdsourcing 7. Insanely easy and consistent transactions 8. Feedback 9. Reduced servicing 10. Great online help
- 14. Why is Amazon so popular ? ? Competitive Prices ? Quick Delivery ? No fuss returns policy ? Huge choice
- 17. ? Barrier of entry – Medium – Kindle Fire vs. Apple iPad – Kindle Apps vs. Apple Apps ? Potential Entrants– Medium to low – eBay ? $3.38B in revenue (Dec. 2011), 19.3% of Amazon’s Revenue ? Threat of substitute – Low – Innovated Service – High Brand Recognition – High Customer Satisfaction – Well Recognized and Trusted Service ? Bargaining power of suppliers – Low – Sales Medium for Third Party Sellers of books, audio, technology – Pay suppliers quickly (35 days after item has been sold) ? Bargaining power of customers – Low – Cost Leadership Industry Profitability Analysis – 5 forces
- 18. ? Key Successful Factors ? Efficient Supply Chain and Logistics ? Product availability, extensive product line ? Low prices ? Innovative new offerings – Kindle, Cloud, Web Services, etc. ? Ease of shopping ? Strategic acquisitions and investments – Woot.com, IMDB.com, Zappos.com, etc. Competitiveness sources
- 21. ? Online Book Sales ? Online consumer goods ? E-Book (Kindle) ? Music downloads
- 22. ? Online Book Sales ? Online consumer goods ? E-Book (Kindle) ? Music downloads
- 23. ? Amazon On Demand ? Online Book Sales ? Online consumer goods ? E-Book (Kindle) ? Music downloads
- 24. Portfolio Analysis - SWOT
- 25. Sources of competitive advantage ? Maintaining and improving operational efficiencies ? The ability to offer shopping convenience, ease of purchase, speed and decision-enabling information. ? A wide selection, discounted pricing, and reliability of order fulfillment ? Purchasing of large volumes of products directly from suppliers ? Amazon.com aims to ship 95% of products on the day they are ordered. ? The company invested also heavily in warehousing and material handling systems to achieve multifold improvement in throughput.
- 26. Amazon’s Cooperative Strategy ? Partnerships: Drugstore.com, Living.com, Pets.com, Wineshopper.com, HomeGrocer.com, Sothebys.com(auction) ,Kozmo.com etc - Amazoning a sector ? Alliances: Amazon formed alliances with many portals, internet search engines and Internet Service Providers (ISP’s) ? Acquisitions: The first acquisition started in 1998 from Bookpages (one of the largest online bookstores in the United Kingdom), Telebook (operating through its ABC Bücherdienst subsidiary, was Germany’s number one online bookstore) and Internet Movie Database (largest repository for information on movies and television) on April 27, 1998. Recent acquisition was in August 2008 AbeBooks,
- 27. “We don’t make money when we sell things; we make money when we help customers make purchase decisions” - Jeff Bezos, Founder and CEO
- 28. ? ? ? ?
Editor's Notes
- Amazonising a sector – Many of the times, Amazon bought equity stakes in these partners, so it had an equal share in their prosperity.